Why there's such a stir over debt

A SUSPICIOUS person might see the fuss the Treasury Select Committee is making about the interest rate on credit cards and wonder if it has an ulterior motive. It may be, of course, that its chairman John McFall enjoys the easy publicity that comes from intemperate comments on anything to do with financial services. But looking beyond this, it almost seems as if it is trying to scare the public into cutting back on debt.

It is easy to see why this would suit the Treasury. It is shortly going to have to come to the market and borrow more in one year than any British government has done before, and it ought to be worried about what we used to call crowding out - if government grabs all the available money it forces interest rates up for everyone else. That would be bad news - industrial investment would tank and there could well be a painful and embarrassing level of default in the consumer market, which would kill people's desire to spend in the High Street.

Not that it is only the Treasury Select Committee that has a capacity to mislead. Newspapers this week were full of stories about bad-debt collectors reporting a 70% increase in arrears. But no one seemed to think it relevant to point out that these organisations are in the outsourcing business and have recently taken on the collection of huge volumes of additional debt from other organisations that no longer bother to chase it themselves. Their arrears have gone up largely because they are chasing much more money.

Meanwhile, the Department of Trade and Industry has its own reasons for stirring the pot. Junior minister Jacqui Smith disappointed the Company Secretaries' annual conference on Thursday by being very vague about when, if ever, the DTI would deliver on its promise of a Bill to reform company law. Contrast this with its enthusiasm for a Consumer Credit Act which, with an election looming, could promise to come down hard on loan sharks and those who charge 'rip-off' interest rates.

That sounds a much more voter-friendly policy than company law reform - provided they can first convince voters with headlines like those this week that there is a problem in the first place.

Shallow end

THE row this week over the GM crop trials and whether the study was properly conducted seems to disguise a wider issue that has serious implications for this country's future competitiveness. These obviously extend to the practical and commercial application of science to society but also to the world of political correctness, as demonstrated by such issues as the debate over the dangers or otherwise of passive smoking.

Consumerist lobbies are much better organised and articulate than those who base their arguments on scientific analysis and reason. Those who are confident and good at expressing their views influence debate more than the quality of their ideas might justify. The result is that the argument the public hears is dominated by the quick and the clever who are not necessarily the thoughtful or the learned.

The media wants people who can strike a pose. This comes naturally to lobbyists but leaves academics and scientists stranded. The truly informed opt out or cannot engage and debate becomes ever shallower and narrower as a result. And because the media - particularly the broadcast media - has no memory, there is no quality control, no later check to see how right or wrong the pundits were. The penalty for selling a defective opinion is trivial.

This country seems to have twin problems that really do not afflict our emerging competitors in Asia where public opinion and politics is much more pro-business. The first is that the other side of 24-hour news is ever shorter attention spans. The second is that the collapse of respect for institutions has led to an unwillingness to engage with serious academic opinion. The result is there is less and less hard thinking behind policies in business or politics in Westminster, so we avoid analysing difficult issues intelligently and refuse to face up to the consequences of fudge.

With manufacturing going to China and service jobs going to India this country needs to maintain its position at the leading edge of innovation unless we are content with a future that consists of showing Asian tourists round the Tower of London and Stratford-upon-Avon. That would seem to involve far more openness to new ideas than we currently are willing to show. But whether or not we wake up to this before it is too late - or indeed whether serious numbers of people even accept this is a genuine problem - is a moot point.